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The Supreme Court holds that the enforceability of a delegation provision in an arbitration agreement was for an arbitrator—not a court—because the employee attempted to challenge the validity of the contract as a whole.

Rent-a-Center, West, Inc. v. Jackson, 2010 U.S. LEXIS 4981 (June 21, 2010)

In Jackson, an employee filed an employment discrimination lawsuit against his former employer in federal court. His former employer, however, filed a motion to dismiss his complaint and to compel arbitration based upon an arbitration agreement that Mr. Jackson signed at the time he was hired. Specifically, the arbitration agreement provided for arbitration of all "past, present or future" disputes arising out of his employment, including "claims for discrimination." The agreement also provided that the arbitrator—and not a court—"shall have the exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement." Mr. Jackson opposed the motion to dismiss, arguing that the entire agreement was "clearly unenforceable in that it is unconscionable" under state law. In holding that Mr. Jackson's challenge to the validity of the contract on the basis of unconscionableness was for an arbitrator—and not a court—to decide, the Court noted that there were two types of validity challenges under the Federal Arbitration Act. First, there are challenges to the validity of an agreement to arbitrate and, second, there are challenges to a contract as a whole. Since the Court determined that Mr. Jackson challenged the contract as a whole, it reasoned that a party's challenge to a provision of the contract, or the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate.

Affiliated Attorney

Lee C. Durivage
Shareholder
(215) 575-2584
lcdurivage@mdwcg.com

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